Montana governor: Oil and gas boom could fund clean energy

Montana Governor Brian Schweitzer, who been an advocate of the recent oil and gas boom that could upend U.S. energy policy, says he will keep spreading his message when he leaves office.

Schweitzer, whose tenure as governor will end next month due to state term limits, said the wave of drilling across his state could be a model of how to eliminate the nation's dependence on foreign fuel - if lawmakers would just get out of the way.

"Those SOBs out there," he said. "They got $60 mouths and $2 ears."

Montana, which is the fourth-largest U.S. state but has only about 1 million residents, has not faced the public outcry against drilling that has often stymied exploration east of the Mississippi River.

Most of that opposition is misplaced, Schweitzer said. If managed right, he added, the onshore oil and gas bonanza could be used to fund a generation of cleaner energy.

"You got two minutes? I am going to tell you how we change the world," Schweitzer told Reuters by phone on Thursday afternoon as he outlined a plan to help subsidize electric cars with a surcharge on foreign crude imports.

The key, Schweitzer said, is to make sure the public gets a fair share of profits from energy found underground.

When the oil and gas industry threatened to abandon Montana if it increased its royalty take to a sixth and even a fifth of the value of the resources, Schweitzer said he had called their bluff.

"Guess what's happened in the last three years," he said. "We've had the most spectacular year in oil leasing and drilling in the history of the state."

Schweitzer then facetiously suggested the industry could drill in New Jersey if it was looking for low royalty rates.

"You drill where there's oil, dummy."

Governments can encourage energy exploration without letting the industry walk all over them, Schweitzer said, and in that model, the two sides become true partners in success.

One example is the controversial Canada-to-Texas Keystone XL pipeline envisioned to carry tar sands oil to distant refineries, he said.

Schweitzer said he had withheld support until the energy industry in his state got some benefits.

"I'll be for this, but you're going to have to build an on-ramp and sign contracts with our oil producers so that we can get a world price for a world quality oil," Schweitzer remembered telling the pipeline operators as he tried to link the vast Bakken oil and gas formation in the eastern edge of his state with hungry markets.

The Bakken shale formation and its bounty of oil and gas is a proving ground for hydraulic fracturing, or "fracking," as the new technology loosens more than 150 million barrels a year out of the ground in Montana and neighboring North Dakota alone.

Government needs to erase regulation and help pipelines and other infrastructure if the United States is to make the most of that energy bonanza, Schweitzer said, and he will try to build public support for his energy revolution when he leaves office.

"I'm going to go to people who actually have ears," Schweitzer said. "People around this country are going to demand that Congress, once and for all, gets this right."

Schweitzer, who has been mentioned as a long-shot possibility for the Democratic nomination for president in 2016, said he would visit Washington "as little as possible" as he pushes his energy campaign. The governor declined to say what platform he will choose for that effort.